As 2025 comes to a close, it’s the perfect time to review your 401(k) and make strategic adjustments for 2026. Whether you’re a seasoned investor or just getting started, taking proactive steps now can help maximize your retirement savings, optimize your tax benefits, and ensure your investments align with your long-term goals.
Here are five 401(k) strategies to start planning today.
1. Maximize Your Contributions
Know the 2026 Contribution Limits
For 2026, the IRS has increased the 401(k) contribution limits. Individuals under 50 can contribute up to $23,000, while those 50 and older can make catch-up contributions up to $30,500. Review your current contributions and consider increasing them to take full advantage of these limits.
Take Advantage of Employer Matching
If your employer offers a matching contribution, make sure you’re contributing enough to receive the full match. Employer matches are essentially free money that can significantly boost your retirement savings over time.
2. Review and Rebalance Your Investment Allocation
Assess Your Risk Tolerance
Your investment allocation should reflect your age, retirement timeline, and risk tolerance. If your current allocation feels too conservative or too aggressive, now is the time to adjust.
Rebalance Your Portfolio
Market fluctuations can shift your asset allocation over time. Rebalancing ensures your portfolio stays aligned with your goals and helps manage risk effectively.
3. Consider Roth vs. Traditional 401(k) Options
Understand Tax Implications
A Roth 401(k) allows you to pay taxes now and withdraw funds tax-free in retirement, while a Traditional 401(k) offers tax-deferred growth. Evaluate which option fits your current tax situation and retirement goals.
Split Contributions Strategically
Some investors benefit from splitting contributions between Roth and Traditional accounts, diversifying their tax exposure in retirement.
4. Plan for Life Changes
Adjust for Career or Family Events
Marriage, children, job changes, or significant income changes can affect your contribution strategy. Update your 401(k) contributions to reflect your current financial situation and long-term goals.
Update Beneficiaries
Life changes may also require updating your beneficiary designations to ensure your retirement savings are distributed according to your wishes.
5. Minimize Fees and Optimize Investments
Review Plan Fees
401(k) plans often include management or administrative fees. Reviewing your plan’s fees and choosing low-cost investment options can improve your long-term returns.
Explore Diversification Opportunities
Consider diversifying your 401(k) investments across stocks, bonds, and target-date funds. A well-diversified portfolio can help manage risk and support growth in varying market conditions.
Final Thoughts
Starting your 401(k) planning for 2026 now can make a big difference in your retirement savings. By maximizing contributions, rebalancing your portfolio, considering Roth vs. Traditional options, planning for life changes, and minimizing fees, you can set yourself up for a stronger financial future.
If you need personalized guidance, contact our team at Cornerstone Portfolios to review your 401(k) strategy and ensure your retirement plan is on track for 2026 and beyond.